Iofina Share Discussion Threads

[rugrat2] 02/6/2013 21:44

Pcjoe - I posted a few weeks ago about the Vici and Woodward plants - from memory neither company has drilled a well for some years, and the opex is almost certainly going to be mainly spent on the extraction process in the plant itself.

I really can't see IOF drilling for brine - they have enough on their plate already.

[n3tleylucas] 02/6/2013 21:33

"just wondering if self drilling is a strategy they might consider"

Now that was funny.

Oh stop teasing us SCRUTABLE, come on ... let's have it. I want one good post this weekend.

[rugrat2] 02/6/2013 21:14

Thanks Noli

For those that attended the presentation, am I correct in thinking that JP talked of negotiations to purchase an existing commercial swd in OK, or have I dreamt that? Not too many choices amongst the seven if that is the case, probably just a couple in reality.

[pcjoe] 02/6/2013 21:10

The opposition at Iochem in Oklahoma are producing circa 1200T of Iodine by means of drilling down to access brine (16 wells apparently)- Iofinas strategy of tapping into waste brine produced by O&G operators obviously cuts out the need & expense to drill their own wells but just wondering if self drilling is a strategy they might consider in areas of high PPMs where O&G interests might be slow or reluctant to commence their operations? - I wonder what the lease situation is like with regard to that scenario - Anyone hazard a guess re what Iochems opex is?

[the librarian] 02/6/2013 21:07

That will do nicely Rugrat.... a great piece of research (glad you didn't forget the mini's).

I think Kr said something similar :)

[noli] 02/6/2013 21:00

Great post Rugrat, brilliant indeed.

[king_roster_iii] 02/6/2013 20:47

Woof woof grrrrhh

[rugrat2] 02/6/2013 20:31

As many of you will know I have been keeping a close eye on the operations being run by MidStates, Sandridge et al in Woods and Alfalfa counties, and in particular the SWD wells.

I thought that it might be interesting to put a little flesh on the comment in the presentation on page 13 – " building multiple sites at the same time in less than 25 km radius". The link below is to a 30 mile (48km) diameter circular GoogleEarth image which has 38 SWD wells marked on it. These are active wells or wells at the permit /spudded/drilling stages, and cover all the major players and seven of the eight commercial SWD wells in Woods and Alfalfa counties. There may be further wells operated by smaller operators that I have missed, but I doubt that there would be a handful of these.

http://i44.tinypic.com/mh3dz.jpg

The presentation doesn't say where the centre of the area is, but I am assuming that it is 5 miles north of IO#2. This takes the top of the circle to within a mile of the Kansas border. The drilling activity makes it very unlikely to be further south or west IMO, but it could easily be a few miles further east, which brings in more Sandridge wells.

Whilst most are vertical wells capable of handling around 30k bwpd, there are 13 deviated wells, including the four MidStates ones, which are mostly in the 50k-70k range, and the one pair of Sandridge verticals on the Jessica lease giving about 60k capacity.

So, of the 38 SWD wells, how many are currently eligible as targets for IOF assuming that ppms are OK? There are several categories of wells which do not fit:
. Recently permitted wells, which are likely in many cases to be drilled before any producers are drilled, eg. Sandridge's Miguel SWD permitted in April.
. SWD wells acquired as part of the transfer of lease acreage between operators, and which do not feature in the current focus area of the new operator. For example the MidStates Zahorsky SWD appears to fit this description.
. SWD wells drilled to service HBP (hold by production) wells. These are individual wells drilled outside of the focus areas which have had to be drilled to prevent the loss of valuable lease area intended for future development. These areas will not be intensively drilled in the near future sufficient to support a 30k IOsorb unit. I believe that the MidStates Cook SWD falls into this category, and probably also the Murrow (and Morehart?)
. SWD wells which do not have sufficient lease area around them to support an extended drilling program giving the IOF plant a sufficiently long life. This covers the likes of Triad and Chaparral for example. They may of course be targets for mini plants.
. The big lease holders ie Chesapeake and Sandridge will have their field development plans mapped out and to be honest if you compare the income streams from oil and the iodine royalty I can't see either bending over backwards to drill in IOF's preferred area unless the oil is up to scratch there as well. If you work out the figures, a 450t IOF plant from a 30k bwpd brine stream, at $60 per kg and 10% royalty will transfer $2.7m per year to the oil operator. Assuming a 9:1 brine to oil equivalent ratio, ie about 3333 boepd from the wells feeding the IOF plant, then at $80 per barrel that grosses about $97m, so about $73m net of LOE and royalties. So this will possibly knock out some SWD's from the equation if the oil production from the wells feeding them is not up to scratch.

So how many of the SWD's are really potential sites for 30k IOF plants? Well I can knock off about half of the 38 on my meagre knowledge of the area, so I'm reckoning maybe 10-15 depending upon suitable ppms. So no shortage of sites in the 25km radius for maybe a couple of years, and clearly by then the position will have changed with more potential sites coming available. And there is plenty of scope for the minis.

[warmsun] 02/6/2013 20:25

Masie seems to have become infamous here without even posting here!:)

[superg1] 02/6/2013 20:10

Oh, by the way, I'm not sure today's comment was what Maisie dog was talking about :-)

[superg1] 02/6/2013 19:48

I don't want to go too mad on the header, just some basics included. Those basics, with delivery, are more than enough to justify a higher share price as we move through H2.

[engelo] 02/6/2013 19:35

Excellent header SG: concise, to the point and enough to whet the appetite for new readers :-)

edit: wonder if an oil subthread would be a good idea to complete the family?

[n3tleylucas] 02/6/2013 19:17

In other words, no share tip, useless & meaningless index, shares should fall tomorrow.

[diggulden] 02/6/2013 19:17

Good job on the header SG.

[n3tleylucas] 02/6/2013 19:06

If BBY are in that small cap index @ £1.6b, they need to examine their definitions.

AND to put AIM's in it, makes you wonder just how seriously it's followed by ii's?

[alwilliamson] 02/6/2013 17:41

Pcjoe, being part of an msci index can only be a good thing. But the thing with many ETFs is that they track the performance and not necessarily the underlying stock. They are referred to as synthetic and they could in theory comprise of anything that iShares or DB X etc.. think is going to perform well or better than the underlying index.

[pcjoe] 02/6/2013 16:11

Criteria selection for getting into MSCI indices appears to be in here - check out page 12 - Fairly heavy going but companies do appear to have to meet minimum requirements/standards and are not randomly selected - See what you think - going back to the gardening

http://www.msci.com/eqb/methodology/meth_docs/MSCI_May13_GIMIMethod.pdf

[pcjoe] 02/6/2013 15:54

Quite a few funds tracking constituent shares in MSCI indices it would appear - Possibly a good few more tracking various sector indices as a small part of an overall investment strategy

https://www.google.co.uk/#sclient=psy-ab&q=msci+tracking+funds&oq=msci+tracking+funds&gs_l=serp.12..0i8i30.13786.15607.2.17662.4.4.0.0.0.0.106.402.1j3.4.0...0.0...1c.1.15.serp.KRnP-2x55As&psj=1&bav=on.2,or.r_qf.&fp=2ff8f39d2adbdb70&biw=1280&bih=863

EDIT

Thanks for the correction Al - ETFs deleted

[warala] 02/6/2013 14:00

Jonnyno1. Thanks

[supreme mo] 02/6/2013 13:44

A potential future distributor for iof could be Pantheon, that's if they need a middle man, but looking solely at the US demand, they might not need to go down that road.

If you look below on an alibaba - "Pantheon is a global distributor of Iodine for Cosayach" - distributor location India.

Interesting, I think Jeff P said there is huge potential in india....

[jonnyno1] 02/6/2013 12:52

no, msci is just an index, not a listing.

j.

[warala] 02/6/2013 12:07

Would entry into msci mean we could put iof in an isa?

[smilingmickey] 02/6/2013 11:57

SG,

1987 is an old article to find on the internet re brine leases!

One might assume that the brine licences that IOF bought from Arysta when acquiring the IO2 site might act as a template for others they will be negotiating.

For each news site I guess that IOF will have needed to establish brine leases in advance. They are really in pole position because they are the only option for the licensors to get cash from Iodine extraction right now, and the Oil Companies will support IOF them as they will also be receiving cash.